cnbc. i'm becky quick along with joe kernen who is back from vacation. andrew is off this week. our top story this morning is isaac. tropical storm on a westward march to gulf of mexico. hurricane warnings have been issued for portions of the northern gulf coast. threatening to disrupt gulf supplies. platforms have been evacuated. a powerful hurricane could make landfall near louisiana almost seven years to the day after katrina struck. let's get more on the storm's path right now. alex wallace joins us live from the weather channel. alex. >> good morning. isaac, no doubt the big story. latest stats from the national hurricane center, latest advisory, 65 mile-per-hour sustained winds. as you mentioned moving to the west-northwest at 14 miles per hour. hasn't changed a lot since the last advisory for folks here. but we're still certainly seeing it looking a little better at least in term of the satellite

presentation compared to what it did say 24 to 36 hours ago. center of circulation well to the south and west of the southern portions of florida but we're still feeling the impacts. you see some of the clouds streaming all the way up into the central portions of the state. rain bands rotating on in. we have the potential for tornadoes that may be spawned and that's why there's a tornado watch that's in place stretching just south of orlando to the keys through the early portion of our morning. we'll keep an eye on that very close lui. where is isaac going to be heading? the projected path has shifted just a little bit further to the west since the last advisory. you can see what's taking plus in terms of the wind strength moving up gradually through the middle part of the week. late tuesday into early wednesday approaching portions of the gulf coast, portions of louisiana and mississippi implicated in that. tracking its way inland. watching the threat for big time flooding in those areas. we got the warnings that are in

place. hurricane warnings and that want does include new orleans back over towards destin. hurricane conditions and tropical storm warnings in place for the west coast of the state of florida including around tampa. rainfall amounts, piling up out there fours. this goes through wednesday. three to five inches possible around the tampa area, same towards jacksonville and ramp up our rain totals working our way along the gulf coast, five to ten inches ever rain. gulfport, pensacola, new orleans three to five inch range. talking about rain like that coming down so quickly flooding problems will be an issue as well as power outages with those gusty winds. following isaac closely here at the weather channel. guys? >> yeah, thank you, alex. it was irene a year ago right around now because i was coming back -- there was a tree in the mid. my living room. i and i and then anniversary of

katrina and haeeading up the gu. >> state of emergency is declared there and lookout for all of these things. >> katrina, hopefully the reason that it was like a once in a century -- hopefully that's -- hopefully it's a once in a century thing. anyway, got a lot of things to think about today. but we're going to get to john harwood. one thing that's kind of disturbing we lost neil armstrong, one of the most humble great men. my god, so cute. very sad about it. i remembered when he was landing on the lunar land motion dull, flew 72 missions in korea but when he was landing, they needed to conserve fuel or else they couldn't take off and he was coming down and nowhere to land and i think he said something to

the fact in ground control oil be busy for a minute here so i can't talk. he moved around and i think he had like 11 seconds left of fuel or they couldn't have taken off when he found a place where it wasn't rocks or mountains or something. so we lost him but we got snooki's baby. so just seems we -- the worst weather from isaac is now expected to miss the republican convention in tampa. >> you never know. >> we all have a chance. the schedule still being adjusted republican national committee chairman is going to call the convention to order. then they will postpone it until tomorrow. shortly thereafter gamble the

convention in a recess, a recall vote to nominate mitt romney for president tomorrow. john harwood joins us from tampa. give us a weather report first, john. is it raining outside? >> yeah. it's raining quite a bit. it's not the worst i've seen. i used network for, started my career in a florida newspaper right in this area, the tampa bay times, the saint pete times. been through worse storms than this. it's blowing and pretty wet outside. tampa is spared by far the worst of this thing. much more concerned about my daughter who is in college at tulane. they will get it a little bit more or a lot more than we'll get it here. >> right. so the impact on the convention at this point is not really the rain and the actual winds but now i saw on the "daily news," the lowest blow that i saw, so

to speak taken was that republicans ready to party as hurricane heads towards new orleans. so now it's going to be how can you, you know, have this convention when this is happening. so that's going to be a spin and it also harkens back, i guess, they will tie it with a wink and a nod to, remember how bush handled katrina, remember how republicans handled katrina. >> i got to tell you, joe. >> i saw it last night. >> i don't think that will be such a big problem for the republicans. >> maybe not but i saw it brought up on the news on the national news last night. >> i was talking to one of romney's strategist who said i'm concerned if the storm hits the gulf coast and produces a lot of damage about the split screen between the devastation and what's happening in tampa. but do i think people can realize that more than one thing

happens at one time and the idea you can call it a party, i think it's, we're in an election, and they are nominating a candidate. i tend to think that that concern gets exaggerated. one event that matters at this convention will take place thursday ninght in the 10:00 hor when mitt romney gets to address millions of americans. by that time i suspect that this story, the isaac story is going to be sufficiently diminished it won't interfere. >> this is a day -- mitt gop ready to party as new orleans braces for isaac. the implication, here's another republican in charge as something is headed towards new orleans and obviously they are going party. >> remember, joe, republicans faced the same thing four years ago when they were in minneapolis and you had a hurricane coming to the gulf

and, you know, had nothing do with their convention site, but they were concerned about the images and so they cut short their convention then. but, you know, we'll see how bad the storm ends up being. if the storm fizzle it's a nothing of a story. >> "usa today" romney says obama is waging a vicious campaign. i was in the airport waiting yesterday to get on a plane. and they make you watch cnn. i couldn't get away from it. >> it's not just -- >> i felt like i was in clock work orange. >> isn't that crazy. you were sitting right across from the store and making you watch cnn. they have good pictures of you up in those stores. >> they wonder why they have a problem. i was watching the coverage and i was like strapped in my chair.

candy crowley and her guest. they were making a deal -- you know they say that obama has been -- no one more vicious than romney bringing up that birthing thing again. they talk about that quick joke where he said i don't need to -- because i'm from michigan. they went over that candy crowley for an hour, for an hour and she was just shaking her head about oh, the idea that -- is that a big deal to make that as a joke or is at it bigger deal say somebody died of cancer because you didn't have health care because of bain capital laid somebody off. >> also a poll that's out there, john, "the washington post" is confirming despite all these other things that media is looking at it's really the economy that voters say is the most important thing. >> course. >> no matter what the media is coming up, 72% of people asked say that obama's handling of the economy will be a major factor in the vote. >> course. everybody knows that that's the

issue. but i wouldn't necessarily say it's the media coming up with stuff. i mean -- >> you're leaving the media. course you wouldn't say that. you're leaving that. >> stuff comes up because campaigns do things. they raise issues. mitt romney's running ads on welfare. he picked paul ryan so he knew in picking ryan that was going toe less elevate the immediate care issue. romney strategist i talked to last night said they are okay with how they are fighting that issue trying to neutralize the democratic advantage. but it's not just the media doing that, it's -- >> i do watch and i watch different networks and there are so many different ways. i mean i've seen it, john the way it can be spun. i heard that romney had the worst ten days of his campaign because of akin, because this guy, some guy said something so suddenly that neutralized any

positive ryan bounce because akin threw it off track. i don't know. one thing -- >> go ahead. >> actually i was going to say to john -- >> one post script to the lead in, becky. halley barber may have declared a state of emergency. >> said that. >> in his living room. >> it's not him any more. i said that as i said it. >> he declared a state of emergency. >> i can ask you one other quick question. the newspaper yesterday, the sunday columbus dispatch said ate dead heat there based on their polling. they said it came out with a lead for romney of two percentage points. two votes. a difference 2005 voters in what they sent out. i was surprised to see it that close. are there other polls or other things that indicate the same? >> that was an outlier in terms of showing romney tied. other recent polls have shown obama a few points up. if you average them all together

he's up by a couple of points in ohio. romney is competitive there. extremely competitive here in florida. >> and wisconsin. >> it's because of the 29 electoral votes and romney is running very, very close to obama here, tied if not slightly ahead. so, we got seven or eight battleground states where romney needs to win most of them. when you look at the states that's in the bag for both candidates romney needs to win most of the battleground and that's a tall order but within strike being distance and enough of them to do it. he's got to get over the hump because this is trench warfare where so much of the electorate is dug in, they've chosen sides. >> 11% undecided. but this is before the convention. >> ah-ha. >> number one. number two, until he gets the nomination he can spend all that rnc money which they have been out raising, and then the

democrats, their convention. usually republicans will get a bounce. is joe biden, is he going to be there, do you know? are they going to have him there? >> i think if you're talking about tampa. >> no about whether they will have him at the dnc. >> yeah. >> are they? are you sure sm >> we'll put his speech on tv, joe. >> i'll have to see that to believe it. that might be the highest rated night, though. yeah. i don't want to go back in chains, do you? >> don't know. >> all right, john. i was going to talk quickly just about, we're -- thanks, john about viacom. remember we heard about spongebob and ratings are down across the board. their solution is run a lot more ads to get -- >> or? >> because revenue are down because of ratings.

does that -- that's like a state that doesn't have money -- isn't it? >> yes. drive viewers away. >> 9% more ads. that's weird. all of a sudden scary. it scared me. womaning up much more on isaac including a report from the gulf coast where they are bracing for impact. another victory for apple pap jury awards the company a billion dollars from samsung. i got it. i didn't mean to talk. will this push the stock above $7 haun share. you be the judge next on "squawk box". machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference.

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welcome back. the u.s. equity futures at this hour, let's take a look. the dew futures indicated up by 21 points. s&p future up by just over four points. last week we did see a down week for the markets breaking that six week winning streak. we saw some strong days. not as much of a loss as you expected. in our headlines tropical storm isaac is swirling into the gulf of mexico today. forecasters say it could strengthen into a powerful hurricane. isaac swiped south florida yesterday before moving into the warm gulf waters that's where it picked up power and expected to strengthen to a category 2 hurricane and hit the gulf coast somewhere between florida and louisiana by the middle of the week. oil prices this morning with the talk and shut ins you've seen in the gulf are up by a dollar,

90.20 is where wti crude oil stands now. >> bank holiday in the uk but becky meehan is still hard at work and joins us from london. that's weird. so does kelly take off bank holidays or something? do you know? is she at the bank. >> basically no one here today just me and a camera pretty much. i'm doing a double-shift because everybody else is at home with their families. >> you sound, i'm going to say you sound okay with that. you're fine, right? it's a one woman show, that's good, right? >> more face time for me which is great and also i get tomorrow off instead, so i shouldn't complain too much. >> that's good. >> basically no one else in the city of london. so tricky to get coffee or lunch. i may starve to death but i get an extra day off. this is what the picture looks like. gray for the uk markets because everybody is on holiday apart from me.

across the rest of the region, few markets gaining a bit of ground but many of them have swung back to positive having been negative early on. the dax is up by 1%. adding nine or ten points. the cac is just higher but just barely. the ibex has been struggling today. been struggling for a while. spanish market is down by 36, 37 points. swiss market losing a little bit of steam today just down by 13 points. here's a look at the bond markets. we had an auction this morning of 12 month debt across germany and another one of these negative yield auctions once again. 12 month debt getting away. essentially investors paying to hold this debt. along with the u.s. treasuries seen as a safe-haven. ten year 1.366% low yields. over 2%, 2.06% on the french ten

year debt. in spain elevated but well below the levels of 7%. plus we're look at not too long ago the ten year spanish debt 6.4%. italian yields coming back much more under control, 5.7% for italian yields. >> good luck finding lunch, dinner, coffee, anything out there. we appreciate your time today. folks back here one of the biggest patent wars one history has come to an end. apple awarded dolla eed $1 bill. apple stock is hitting record highs. let's bring in brian marshall. what does this mean for apple? >> obviously a resoutherning victory so i think the courts clearly telling everybody that competes the android eco system don't steal apple's ip. this gives them a much stronger foot hold with respect to ip and

technology. great win for apple. >> certainly not the last word in this battle. this is one of many court cases that have been filed around the globe. some people said that this is one they expected apple to win because they had the home court advantage. what about any sort of juries that were hearing these things, judges that would hear these things in south korea. >> apple lost a recent case over there in south korea. apple had some issues with respect to motorola, elsewhere. it varies by geography for sure but the important part on this one is, you know, there's a big, big market in the u.s. and so apple needs to request whether or not they want injunction for these products. i assume they will do that today. then the judge has the next several weeks to determine, you know, troubled damages. will this be turned into $3 billion as opposed to the billion dollars they were awarded. a lot going on. a lot of moving parts. definitely a positive for apple. >> what if i'm a consumer using

a samsung phone dpoip have to worry about anything? >> not yet. potentially down the road this could lead to less application developers or actually more delays for application developers to, you know, work with the android community. there probably will be having some error interface upgrades from an android standpoint. could be some changes but i don't think there will be anything material any time soon. >> you said this is a victory for apple. what does it mean in terms of the stock. it something you like the stock more. think it should have a higher price target? >> not yet. we've been very constructive on apple for the last couple of years, one of our top picks. apple's issues surround more of its own success and how much the marketplace can actually afford the apple product. i don't think apple's issues surrounds the competition. obviously android has done extremely well. apple, apple's future success is

more dependent upon how much of the market opportunities is there to penetrate. >> there's an interesting article in the "new yornew york said the technology company shouldn't have received the same type of protection as drug companies do. what do you think about that argument? >> it's interesting. we put out this tidbit. it was talking about patents issued. apple is number one in patents issued. it's phenomenal how many patents are issued out there. apple is in the to 7 last year for technology patents granted. so the u.s. patent trade office is a very active and busy operation that's for sure. >> part of the reason they didn't think it should receive the same patent protection is because things change so quickly in technology and these patents are next to point understand they don't think anybody at the patent office can get to the bottom of some of these things.

samsung came up with the argument hey we can't believe we're losing something for patenting a rectangle with rounded corners. does that argument fly >> i'm not sure 100% on that argument. ultimately there's a look and feel clearly and this is a brand new implementation application, apps, apple created for the most part how they are delivered over the last several years so there's a look and feel associated with apps that you can find in the app store, on the platform. to the competent its tailored or hooked into that platform i think there's a look and feel is your ronning that. >> brain, thank you. we appreciate your time this morning. >> we'll head to the gulf coast. scott cohen, saw him on the "nightly news" last night. he's tracking tropical storm isaac. preparations and potential impact on the energy sector. oil already up like $100.

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♪ good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. andrew ross sorkin is off this week. our top story is tropical storm isaac. it's on a march towards gulf of mexico. hurricane warnings have been issued for northern gulf coast. it's threatening to disrupt gas supplies. platforms have been evacuated. production has been shut. warm waters there in the gulf and that's what whips these

things up. powerful hurricane could make landfall near louisiana almost seven years to the day after katrina struck. scott cohen joins us from gulf shores, alabama. you don't look too worse for wear yet, scott. >> reporter: no. we're enjoying a slightly chilly morning on the beach here, joe, as we wait. it's the proverbial calm before the storm. a lot of issues come in to play and you outlined them there. the hurricane warning currently is for a wide swath of the northern gulf coast. so we have seen people brace for it. we're on the eastern edge of the so-called cone of uncertainty here in gulf shores, alabama which is in the mobile area and we saw people very steady flow of folks at the local walmart store clearing out basic staples like bread that are tough to come by and they also are looking at gasoline, a lot of people lining up for gasoline,

stocking up. there have been gas lines reported from here in alabama all the way west to new orleans now as that area has come in to play and people start doing what they normally do in the case of approaching tropical storm and possibly hurricane likely a category 1 by the came it gets here in 24 to 48 hours. the gasoline folks are worried about the short run but there's a longer run issue here with 22% of offshore u.s. production overall, i should say in the gulf of mexico. the farther west that these forecasts go and they keep drifting farther west the more of this comes into play and there's more refining comes into play, this is also home to about 44%, 44%, 45% of u.s. refining capacity and the refineries begin to concentrate west of where i am. mississippi, a lot of them in la and then into texas. that becomes a big issue as you

look at the locations of the refineries along the gulf coast. the storm so far tropical storm isaac has been pretty much a nuisance, about 20,000 people without power in florida, as winds and heavy rains went through there. now as you said the storm is picking up some strength in the gulf of mexico but not as much as had been feared and so the official forecast again calls for a category 1 storm when it makes landfall, that's something that this area could probably absorb with minimal disruptions, but still a lot of uncertainty in the forecast. guys? >> katrina was not a 1. it was way up there. it was a 4. >> katrina was, when it was in the gulf of mexico it was a 5. then it lost some steam and i think officially ultimately it was a strong 2 or a 3 when it hit, when it hit new orleans. but the issue is the rain and

storm surge that sent the waters up, of course new orleans has done a lot of repairs since then and increasing their flood protection. >> nobody knows but forecasting it goes 1 and they are pretty good at that. it's unlikely it gets to a 3 or 4, right? >> it's unlikely i want goes a 3 or 4. i'm no meteorologist, but the meteorologists say intensity is the toughest to forecast. we've seen storms in the past that picked up a lot of intensity and others that have fizzled out. the official forecast is that it come ashore as a category 1, which would be a big relief to a lot of people but doesn't do anything about the disruptions we're seeing as a precaution offshore and potentially onshore. >> basically, you always have bags packed and you will go where it's trouble, really trouble of any kind, right?

whether it's malfesance, you go where there's trouble snooupt adrenaline. it's important. >> i know it. we send -- it's like when do we send scott cohen to places and it's wherever there could be some trouble. all right. >> yeah, i came to town here and people started running. >> i bet they did. anybody running a ponzi scheme down there is like, looking around because scott cohen is there. every investment guy is worried because you are down there for a reason. hiding their second set of books. hopefully it's exactly what you said. maybe less. you won get to one. that would be better. >> we'll check in with scott covering this all day. in the meantime let's look at the markets. the futures have indicate ad

higher open this morning. right now dow futures up by 27 points. s&p futures up by three points. last week we saw the dow and s&p end their winning streaks. a rally in the second half of the week and the markets ended down less than half of a percent. oil prices are indicated higher because ever everything cott talked to us about. up by a dollar. 97.13 is where wti stand. ten year note, we saw the yield all way back up 1.8% now. 1.67%. came down and lost some ground. after we talked to bullard who said he's not convinced the fed will move right away based on improving numbers. if they do he said you can expect a much smaller move, no grand qe3 like we saw with qe2. smaller moves. market pulled back on some of these things. >> you wonder why oil is up there.

oil thinking qe3 was coming. >> now you got the hurricane. also have iran with tensions there. >> are they buying anything? draghi buying anything? they have nebulous target ranges. they want the bond markets stay. >> if they stay within something tied to the spread between that and german bunds -- >> and merkel said stop the right in germany have to stop saying greece you stuck, they are done. they have to be nice the greek. so bizarre. it's just playing out as we saw. >> dragging out and dragging along. >> dragging draghi. >> dragging draghi. we'll hear more about that this week, draghi speaks this week at jackson hole. that's the big event people are waiting for on friday. also the dollar last week was actually down. down by 1.5% against the euro

for the last week. also the dollar index was down about 1.2% last week. it's down once again. euro standing at 1.2528. dollar is up against the yen at 78.69. gold prices where we saw some massive moves last week with the fmoc minutes and then pulling back, gold is at 1673.20 an one. we're entering that final week of august with the gop convention, got the hurricane threatening the coast. what else should the markets be watching? joining us the managing director at specter massive management. ben bernanke will be speaking on friday. what do you think the markets expect to hear from him? >> a lot of anticipation right now from the formations of some of these markets that you just mentioned and two in particular have really kind of emphasized the markets' plea to start

seeing some of these rallies dismiss and then rally back. two of those are the way the s&ps hold 1400 and the other is also the $8 corn level which for the first time in a while we got a lot of rain here in chick and the midwest overnight and we're still bid. i only mention that because in front of some of this testimony, or some of these words broken down last week i thought the most significant move was clearly in the metals complex and in particular the way silver rallied well. right now there's a lot of belief that globally there's so much pessimism in the pipeline you're starting to see the metals really get what is the brunt of the move here and that bid should continue and for those reasons i want to see if that follow through continues because as you used the gold example that kind of tapered back in the way the dollar gave up a little. that's surprising. >> surprising because you think there is more strength to this trade? i've heard a lot of people say that. i heard others say wait a second don't get fooled too easily. >> a lot of people if you just

want to use the euro as a reference, a lot of people don't think 1.25 will be a level that's going to hold. there's a lot of bearish pressure in the euro right now up 1.25, expecting to get back down to 1.22, 1.23 off of this. one the things you'll talk all week is crude oil and what's about to hit land and refining. if you look back the last time we were at these levels was in the beginning of may and it took only two trading days to get from 105 to 98. crude oil as an example right now very short term traders are thinking that after this kind of gets through the market at least this belief that we could have some disruptions or fundamental supply reasons why crude should be up here this could be a classic example of a head fake and then you start seeing the retracement back lower. it's domestic in its nature as

we speak today. i think you have to watch the relation of how the wti trades right now in relation to where those metals are. will they keep a bid to the market. i don't think so. one will go after the other after we see fed testimony and then what will happen you'll start seeing silver and gold keep that bid. >> michael, thank you for your time today. >> thank you. >> comments, questions about anything you see -- i get my comments and questions on this twitter thing. that's ail get. i get three of them. that's it. i like that hair thing. they like the clock work orange. >> yeah. >> forced to watch cnn. >> really good in the double box. do it again. >> remember the guy is strapped in a chair. that's the only people watching cnn, i think at this point are people in airports and they can't escape. they have to wait for the plane. e-mail us at squawkbox@cnbc.com.

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wow. whoa. 80 carats. hurricane isaac. what color is it >> yellow. >> fancy, intense yellow.

wow. don't show it yet. 80 carat. how much it is worth? is there anybody here protecting you? >> we're on air. >> yeah, we're on air. >> hurricane isaac moving towards the gulf coast. cnbc's phil lebeau joins us from chicago with a look at how airlines are preparing. i guess the gulf coast is a place you want to try to avoid. can they go around, phil? >> they are going around. in fact thakt's what they do. they take the aircraft out of the storm impact. they are track flights around the world. in north america 60 flights most of those red eyes going into the new york area. zoom in on the gulf coast and you can see what do we have down here? >> a handful of flight, just few. some going into the houston.

one over tampa. generally speaking they have pulled all of their flights and planes out of this area and that's what eve seen for the entire industry. they have just pretty much avoided the gulf coast area. 742 cancelations due to isaac over the last 24 to 48 hours. american airlines most hit obviously because of the hub in miami cancelling almost 500 flights. miami and fort lauderdale airports are closed until noon and decision about what happens in new orleans that's going to be made by united and other airlines later today at their daily network operations briefings. >> we're obviously keeping a close eye on key west and south florida stations and we'll develop plans as far as schedules are concerned over the next 24 to 48. >> they have been monitoring isaac nor than a week here at united. because of isaac they cancelled 26 flights mostly into florida,

some into the gulf coast area. they are monitoring about 5,500 flights every day here at the command center and weather impacts about 7% of united's flight around the world on an annual basis. not some cancelations, some delays. they've make this decision every day. they hold these briefings where they make decisions what happens next with their aircraft. >> generally in the 24 to 48 hour period we'll make decisions do we pull down the schedule, how much, when do we anticipate bringing the schedule back up. >> the key is bringing it back up as bringing it back down. >> can we provide extra lift. >> as you take a look at shares of united which are up 7.5% in the last year, i want to come back live here to the network operations center. the gulf coast. one little flight up there by tampa. 26 cancellations just four into

tampa. remember guys so many people were worried about flights in and out of tampa because of the republican convention, whether or not they would be impacted. generally speaking that's been spared. decisions regarding new orleans they will be made here in the next couple of hours and later today that's when they decide do we pull out the aircraft, what happens next. guys, back to you. >>ful thanks very much. we'll be watching and waiting. when we come back we're going the birth place of a girl ears best friend. we'll do inside the richest diamond mine in the world. come back to camera for a minute and show you what an 80 carat rock looks like. here's a quick look. start guessing right now how much it's worth and we'll give you a free preview when we come back. or lauren's smartphone... at&t has a plan built to help make families' lives easier. introducing at&t mobile share.

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well, we know about the gold rush but what about the diamond rush? cnbc's bob pisani takes us inside the richest diamond mine in the world. >> reporter: around the world, the rush is on. to unearth one of nature's most precious creations. companies and individuals are digging, shiifting, trucking an crushing around the clock with one gem in site -- diamonds, and

no place on earth is believed to have more than here in africa. i'm right on the border between botswana and south africa. this part of the world is famous for its wildlife and game preserves. it was the discovery of diamonds in the 1880s that really put this part of africa on the economic map. ♪ today when it comes to diamonds, botswana, a small african country of 2 million people is leading the charge. they call this the prince of mines. just how valuable is this mine? >> to get the answer of that catch the premiere of "the diamond rush" at 9:00 eastern time, and that will explain to you just how valuable the debeers mine is. speaking of diamonds, we've got a beauty here today, 80.69 carat diamond from sotheby's diamond

collection. thank you for turninging it up. 'so heavy it doesn't stay straight on my finger >> it almost looks like it came out from the machines. >> except it's so shiny. >> and it's so big. >> i'd have a hard time believing it's real. it's 80.69 carats. we want to know if you can try and figure out what the price tag is. there is a contest. enter by tweeting @cnb tweeting @cnbc #diamondrush. the winner will be announced tonight during the premiere of the show but it's tough to figure out. >> it's vs1, nearly flawless. the reason there's yellow, there's nitrogen in it, when it's that big, if people hear it's nitrogen it could be yellow and it's not a flaw if there's nitrogen in it. >> if it's blue coloration there's extra boron in it. this one is yellow.

vs1. >> it's a vs1 so it's worth like a lot. >> we have no idea how much. they didn't tell us. >> per carat you figure and the bigger the more carats the more cost per carat. >> because they're rare to be that big. >> right. >> how did they figure out how to cut it? >> how do you decide the best cut, based on color and the structure of the -- >> best yield. >> the best yield, the biggest you can make it from the rough. you do sacrifice some, you get the maximum size and weight without sacrificing any of the beauty. yeah. >> we have our experts here who let us borrow this, apparently i have to give it back. >> you do and there's a guy packing here, too. >> in case we try not to. >> he just waved to me, like -- my whole body's a weapon so i would disarm you. i will -- if i want this, i'll keep it but i'm going to goive back to you.

when we come back we'll talk about preparing for isaac. hurricane warningings for the gulf coast, states of emergency declared in alabama, louisiana and mississippi. gulf oil and gas producers shut, platforms evacuated, a live report when we come back. plus mitt romney preparing for the rnc in tampa. the gathering reshuffled because of the storm. senator ron johnson, freedomworks president matt kibbe and bob corker. tdd#: 1-800-345-2550 when i'm trading, i'm so into it,

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hurricane warnings for the

gulf coast. isaac threatenings to disrupt offshore and gas supplies. it could make landfall near louisiana almost seven years to the day after katrina struck. republicans making their way to tampa this week. isaac will delay the start of the gop convention but the party says the show must go on. delegates will officially nominate mitt romney as the republican nominee tom low. plus, the market story of the week, ben bernanke's much awaited speech in jackson hole. blackrock's bob doll and citi's tobias levkovich will tell us what you should be watching. the second hour of "squawk box" starts right now. >> good morning and welcome to "squawk box" on cnbc, i'm joe kernen along with becky quick. andrew is on vacation this week. our top story is isaac, now a tropical storm on a west-northwestward march into the gulf of mexico. hurricane warnings issues for

the northern gulf coast. high zach is threatening to disrupt the oil platforms and supplies. the platforms evacuated, production shut down, a powerful hurricane could make landfall near louisiana, which would be about seven years to the day katrina struck. alex wallace joins us live with the latest from the weather channel. hello again. >> good morning to you. we're still following isaac, we should be getting another update from the national hurricane center around 8:00 eastern time. the last advisory as of 5:00, 65-mile-an-hour winds and moving to the west-northwest at 14 miles per hour. it's certainly looking a little bit more healthy in terms of the satellite presentation than it has in its history. it's still a rather large circulation. we've enhanced the imagery and put the colors where the purples are showing up, thunderstorms spreading out across the central sections of the sunshine state. we've got rain bands that are

rotating their way on in, bringing with it some heavy, heavy rain and expanding well out from where that center of circulation is, right about in here, talking about rain bands over 400 miles away so i know we like to focus in on the center but again impacts are being felt well away from that. heavy rain coming into places like orlando, not too far from the tampa area as well. these bands could bring tornadoes, that is a threat, that's why there's a tornado watch in place through the morning hours. tampa is included back down towards the keys, but these tropical cyclones there's a lot of spin in the atmosphere and as the storms move on through they can spin up tornadoes. throughout the gulf you can see there's sort of a gradual strengthening. we're not expecting it to completely blow up and become a huge, powerful storm, just a gradual strengthening as it works its way toward the gulf coast. there's new orleans in the middle of the path, we could be talking a category 1 hurricane and continuing to move its way

inland up into sections of the midwest by early weekend. we'll be taublging about what's left of isaac into the weekend. as it makes its way ashore notice what happens, at this point, wednesday early, thursday early morning, it doesn't move a whole lot so it's going to be bringing with it quite a bit of rain over a very short period of time, dumping quite a bit of rain leading to some flooding problems and we also have to track with the gusty winds the potential for some power outages. >> alex, thank you very much. this is creating a lot of concern with what's happening at the republican national convention. we'll have more on that in a moment. let's look at the market headlines. apple claiming a sweeping victory late on friday in that patent trial against samsung. shares of the iphonemaker rising on the news. samsung shares slumping nearly 8% in asian trading. john fort joins us with the story. >> good morning, becky. now that the smoke is clearing on the enormous legal victory, everyone is trying to address

the fallout and kneejerk, apple got a pop and samsung slumped over the weekend. the next big milestone will come in three when the judge decides whether to block samsung's phones at retail. most of the phones involved in this case aren't selling many units in the u.s. at all anymore, there are a couple of phones like the galaxy s2 and nexus sg that could be a concern for samsung. the big sell is the galaxy s3, a phone not directly part of the suit. to the extent samsung is forced to change its software to get around patent issues it may have to push out a software update to keep some phones on the market. 'not rocket science and been done before. don't expect consensus from analysts oen what comes back. gene muenster of piper jaffrey

says it will not have any implications and others say it does. i heard this could scare off android developers but i don't think that's a major risk just yet. what impact will consumers have on the samsung brand? will people feel like it's a copycat or still want it? we'll see. >> thank you very much. >> can i ask him one thing? do you mind? >> yes. go ahead. >> john, everybody's had time to sort of dig in to the nuances here and the weird thing i'm reading is that it was a hardware suit and a lot of the pro pry tier stuff is really software and instead of going after samsung they'd rather have gone after google but it would have been more difficult because it's two american companies, it's easy to go after samsung, get the bad guys in hardware but that steve jobs was really angry

still about android and wanted to destroy the software and google. is that the next step? will that come down the road? >> it could be but what's tricky about that, google gives android away for free. part of the calculations they tend to make here is how much money did the infringer make off of the infringement. with google you have to get into well did they make advertising revenue down the line from having android out there. it's a more complicated case to make than the one apple is trying to make with samsung and others. here is how much we want in damages so they've got cases also against htc, motorola, they're being countersued, that's the next battleground. not sure we'll see legal action quite yet. >> john fort, thank you. one other thing i was thinking of. >> what's that? >> was that you get two things like this, apple goes above the

greatest market cap in history of any company -- >> not when you account for inflation. >> and also just looking at it goes above that and wins this big thing and you wonder are these things indicating the good news is out but when it was microsoft, it exceeded its $600 billion plus, microsoft's price to earnings multiple was 72, and apple's 16 to 17, so when microsoft hit it back in the bubble they needed 72 times earnings to get to 604, whatever it is, and apple did it on 16 times earnings. so the valuations aren't even comparable. despite hurricane isaac's threat to rain on the republican parade, mitt romney is getting ready to be nominated officially as the candidate for president. chief washington correspondent john harwood joins us live from tampa.

john, we're all kind of excited because it's just how many weeks is it? you know it's the conventions start and 70 days and i know you'd just like to watch this stuff play out as a political animal. >> yes, although there's going to be a whole lot of nothing to watch in this convention hall behind me later today. they're just going to gavel the convention in, and take a recess, and compress the convention on to three days, which is fine. it doesn't really cost the republicans very much. the most important event is romney's speech thursday night and that gives them an opportunity to move some of the polls that have shown an extremely close race. he's in striking distance. if you look at the national average of all of the polls taken by real clear politics or monitored by them, 46-45 race, one-point advantage for mitt romney. look in the state of florida, a crucial state again in this election as it was in 2000, 29 electoral votes at stake, dead even tie when you average the polls together betweenby ma and

romney. one of romney's challenges, president obama's and the democratic attacks have really hurt him. he'll try to present a positive view to the american people. he went on fox news to deal with one of the democratic challenges, the accusations he's used tax havens in the cayman islands and swiss bank accounts to reduce his taxes. he said that's just not true. >> there was no reduction, not one dollar reduction in taxes by virtue of having an account in switzerland or a cayman islands investment. the dollars of taxes remained exactly the same. there was no tax savings at all. >> so this is an issue that mitt romney hopes to set aside and guys, i am told that i misspoke and said that romney was ahead by one point nationally when you average all the polls together, it's obama is ahead by one point. just shows we're in a neck and neck race, we have debates coming up in october, those could be decisive events.

this thing is going to go down to the wire. >> i can't imagine you saying that even if it worked for you -- >> nice. >> intrade watching, i don't know what to think of intrade, it's like $15 and you can move that -- it's come down from 59 again, it's at 55 or so for president -- i watched the real clear politics, and i look at the daily polls and then they have that average. that's probably what you watch, too, they have the average for the nationwide polls, narrowing, two or three points and now it's one, i've seen it less than one and ohio is getting really interesting. of course, so is wisconsin and virginia and florida and everywhere else. we are interested in this. >> i do think, joe, the midwest is likely to be the place where romney wins or loses this thing, and this is one of the significances of the ryan pick that wisconsin is a state that

republicans think they can win. it has been a long shot, democrats have won it since 1988 but if you look at states like wisconsin, ohio, those are places where mitt romney really needs to break through. >> i read it somewhere and it might have been in the times that both campaigns agree on a lot of things on the way this is playing out. i read one thing and this sounds like it came from the republican side but the worry from the obama side is that after all is said and done that it does break as we get close to the election, it breaks on the economy and there was 11%, you know, do you think there's nervousness at the obama campaign at this point, john? >> of course. when you're an incumbent president and tight race before the election. >> before the convention, yes, but if you remember, we were like this with carter and reagan. it was carter was still up, even at this point in the polls, and

we look back on it now and we think it was just a rout that everyone saw coming and it was not until the very last week before the election. >> the debate was critical in that race, because ronald reagan, who jimmy carter had been painting as an amiable extremist, came across as kind of reasonable in the debate, and that caused a tip of so many undecided voters to reagan that he ended up winning. he won 44 states in that election, that is a model that mitt romney would love to emulate, but we'll see. you know, the model that president obama may hope to emulate as president bush in 2004 who john kerry was with him all the way to the end but bush had enough states to barely tip over ohio in the end, enough strength to tip over ohio and therefore the electoral college. >> it's ohio again. >> john, the "new york post" today i'm not sure if you've

seen this, the headline they've got the secret reason that chris christie decided not to put his name in, that he thinks romney might lose. what's the buzz there? have you heard anything about this and it's awkward to have a story like this out there when chris christie is the one who is kicking off at the keynote speech at the convention. >> look, i don't think it's any secret to anybody that romney might lose. i mean, obama might lose, too. you talk to their people, nobody thinks this thing is in the bag and one of the things i found interesting is, when you look ahead at a convention like this, you've got people around both candidates who are positioning themselves for what happens if the candidate, the nominee loses and here you've got a little paul ryan versus chris christie thing.

christie being the keynote and ryan the vp. yes, mitt romney could lose, every republican knows it, everyone in mitt romney's campaign knows it but we're not there yet but a long shot. >> and the other thing, they sort of implied or a big part of that piece in "the post" he didn't want to step down and he would have to. he has been consistent with that, christie, he wants to finish his job as new jersey governor. even if you thought it was 55/45, and you weighed if i'm not in, i'm not new jersey governor and i'm young -- remember, he didn't want to run for president either and the reason he didn't want to is because he's young, doesn't feel ready and everything else, so "the post" far be it for the post to ever hype anything, to ever exaggerate, but who knows. right, john? >> would a newspaper ever exaggerate something? >> "the new york post." >> any newspaper. >> you got to cut through this with, you need a grain of salt

the size of that could feed a whole stable with the grain of salt that you need for "the new york --" you know what i mean by that, horses use that, a grain of salt this big to read "the new york post." >> bleh. >> all right, john, we'll see you again i think. >> yes, i liked this. >> you look so good with patriotic things behind you. >> he does. when we come back, we have blackrock's bob doll, here with citi's chief u.s. equity strategist tobias levkovich, the two of the smartest men on wall street talking to us right after this. investment advice and research analysis. it includes proprietary offerings like our eldercare program, which helps provide for those who came before you. and our financial empowerment program, which helps prepare those who come next. resources like these have made us

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if you're just waking up tropical storm isaac is swirling in the gulf of mexico today, it swipes at florida yesterday before moving into the warm gulf waters. isaac is expected to strengthen to either a category 1 or category 2 hurricane and hit the gulf coast somewhere between florida and louisiana by midweek. oil prices are already spiking. i don't really understand it, for the past two months, just under 100. 97.01 today, up about 6 cents. u.s. equity futures are indicated slightly higher. we've been watching this morning and you'll see in a moment that dow futures are up by about 24 points, s&p futures up by close to 4 points above fair value,

after the dow finished down last week, the dow and s&p breaking their winning streak for the week after winning for six weeks in a row. our guest host is bob doll, senior adviser to blackrock and tobias levkovich, chief u.s. equity strategist for citi. that's a mouthful. gentlemen, welcome to both of you. great to have you here today. bob you saw what happened with stocks last week, we saw a pullback but at the end of the week less than a 1% drop. does the trend continue from here? what is driving things? >> well, we've run hard, becky, double digit percentage since the early june period when we had the pullback related to europe. there's good news in the market. that doesn't mean there isn't more good news to come. i've been using the phrase we have a muddle through economy and grind higher equity market. we've done better in the last couple months so maybe take a little rest. we have plenty of liquidity, central banks providing from all over the place, probably a fair amount of investment but we're

short confidence, business confidence, consumer confidence, policy confidence, economic confidence and so that's why it's muddling through. >> owe bias, we'll hear from ben bernanke at the end of the week. we have the fomc minutes last week which made people think the fed was about to act and it would act sooner rather than later. we talked with bullard, the st. louis fed president the day off and told us hold off, maybe they're not ready to jump out there yet. maybe they'll wait and see longer and maybe there's this idea even if they do act it's going to be smaller moves than the big plans that we'd seen before, the qe1, the qe2. >> i think it's probably act, steve liesman did an interview in boston, suggested more liquidity than dallas or the fed of dallas, fisher and he was saying no, i think we're going to hold back and you're getting

this very mixed message from various members of the fed that there seems to be more controversy within the fed, do they want to provide a whole lot more liquidity, even bernanke is suggesting a fiscal policy be addressed, not monetary policy because they've pumped a lot into the system. >> you're not going to see any fiscal policy that comes ahead of this election? >> i could have told you that four months ago when i was up on the hill visiting with people there was no likelihood whatsoever that anything would be done before the election. the election will determine most likely the policy direction the country will take, which is right. the election should be about big issues and we have some fiscal challenges that have to be addressed. >> it's the data dependency phrase and look the data has gotten better. retail sales have been okay, the weekly initial unemployment claims, the monthly jobs numbers, inventories down a little bit, exports up a little bit, housing healing. >> the key is a little bit. >> that's all it is. and we're not going to get that. we still have this bust in

credit overhang that's going to last a bunch of years. >> what do you do right now if you're an investor trying to figure out how to take the signs. we have seen a run in stocks over the last six to eight weeks. >> we've had a 1425 target on the s&p so we're a percent away. our metrix has moved toward complacency and almost gets to the point where if the economy is weak the fed will act. if the economy isn't weak, it's strong enough and the markets go up. that's the tone with investors. i prefer when everyone is freaking out in june that it's a better opportunity to buy stocks. i would say valuations still compelling. the one thing i'm most excited about is credit conditions, the fed survey for lending standards, continues to improve, it's a nine-month lead indicate why are for the economy,

12-month lead for revenue indicators. everyone ignores that because they're so worried about the day-to-day. >> i agree with what tobias said. if all we have is a muddle through market, after a 10% run do you really want to "chase" it. i prefer buying pullbacks but so many people have almost nothing in equities. i'd get something in because there are foblts mopossibilitie higher. we haven't mentioned the fiscal cliff, the european problem that's obviously going to hit the front page from time to time, china, how well are they doing. so there are all kinds of issues to be worried about. >> bob is our guest host, he'll be with us for the rest of the morning. tobias, it was a pleasure having you here. >> good to be here. coming up a slugfest, we'll speak to senator ron johnson, a

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welcome back to "squawk box," everyone. let's look at some of the stocks in the news today. luxury goods retailer tiffany is reporting second quarter profit of 72 cents a share, a penny below what the street was expecting. sales also fell short of consensus. the company lowering its sales and profit forecast for the year with tiffany citing economic weakness in a number of its key markets. also, aol has approved a special dividend of $5.15 a share, that's part of a move to return $1.1 billion to shareholders, that is the amount that aol got back in april when it sold about 800 patents to microsoft. take a look at shares of

nokia jumping this morning after apple's victory over samsung in last week's patent case. some investors feel nokia will benefit if the case results in some samsung smartphones being pulled from the market. also an update on tropical storm isaac, our very own scott cohn joins us from gulf shores, alabama, with morning. good morning, looks like the sun is up. >> reporter: the sun is up and not a whole lot of clouds in the sky, take a look at the gulf of mexico which of course is the focus of everything, here very calm. the center of isaac is still hundreds of miles away, and quite a long distance time wise away as well. those waters are warm, though, and that's one of the shall us and one of the things forecasters will be looking at the storm snz over the open gulf. the longer is spends over water and the warmer that water is the more potential for the storm to strengthen but check out the latest right now, tropical storm isaac still is not a hurricane.

that's certainly a relief, because there was some thinking it could be up to hurricane strength by yesterday. it is not an intensified as much as some had expected. the gulf coast is preparing, nonetheless. people are stocking up on goods, gas, and other things, and beginning to make plans for some mandatory evacuations and the forecast continues to shift to the west. that's not a bad thing for folks here in gulf shores, alabama, who are on the eastern edge of that proverbial cone of uncertainty but it becomes a problem for the metropolitan areas to the west including the city of new orleans and also becomes an issue for the oil and gas industry, which we'll get to in a moment. the hurricane warnings did go up yesterday really throughout the northern gulf coast and people did respond. we spent some time in a walmart store near gulf shores here in southern alabama yesterday, and people were definitely scooping up whatever they can get in terms of staples and things like that and also filling up on gas so as the storm potentially

tracks west, we begin to get into the oil and gas production areas, and take a look at the map of the refineries along the gulf coast, the farther west you go, the more of an issue this becomes, if the storm comes ashore as a category 1, they can probably sustain it. there is a small refinery not too far from here near mobile, a shell chemicals refinery. we drove up there yesterday and they seemed to be operating normally, trucks coming and going, so operations now onshore are continuing a pace, there have been some evacuations of course of nonessential personnel in the gulf, we will see how this goes. about 44% of u.s. refining capacity along the gulf coast, about a quarter of u.s. oil production is offshore, and we'll see how those disruptions go, as isaac continues to make its way through the gulf. >> scott cohn, thank you. thank you. he was mentioned as well. >> i don't know if you've seen this. joe has someone who is parroting, it's joe kernen's

hair, is tweeting here. >> @joekernenshair. >> basically scott got a paid vacation, that's what the hair just said. this is my hair speaking i guess. the one before that was damn, i look good, so he's talking about my hair. i guess -- >> your hair has a lot of opinions. >> sean hannity had an -- >> your hair can be outspoken. >> sean hannity had for year years @seanhannityshair. every waking thought my hair has he weighs in. what did he say about liesman when i was gone? >> don't pay any attention to him. >> don't pay any attention to him, he doesn't know what he talked about. that's what my hair said? >> i'm not only the hair club president, i'm also a client. >> also this week, now we have to get to a senator, that's always hard. >> good luck making that

transition. >> gop convention, we're going to hear more about mitt romney and paul ryan's plan for the economy. i think they should follow this guy, he doesn't have enough followers. joining us is senator ron johnson, hails from paul ryan's state of wisconsin. senator, you have, you're not new, but are you still watching this political, the machinations and for me, i don't know whether to feel good or happy or sickened or what. it just is what it is. is that how i should look at this campaign from both sides? >> good morning, joe and by the way, your hair does look great. >> thank you, so does yours, thank you. >> this is my first convention, and you know, it is what it is, but you know, the good thing is we actually have an election in november of this year, where we can turn the situation around. i've been there now for 19 months. there's been no leadership shown by this president. look at the fact his last two budgets received three votes in

congress, final vote tally 0-610. you say that, it sounds like a political talking point but it is actually unbelievable, it is an abdication of leadership, you have the fiscal calamity, the president puts forward a plan so unserious not a member of his own party would give it a vote. we've got some serious problems but we've got a chance to turn that around this november. >> well, we do and we've got europe playing out right before our eyes, and we know about our entitlements here, and the election being waged on both sides, it just seems like all were focused on one side the rich people have too much and we got to make sure that the level of the playing field, and the other side just seems about to talk about how the president hasn't been able to do anything about the unemployment rate and

we're not getting anywhere. >> joe, one of the reasons i was so pleased about the pick paul ryan is you don't pick paul ryan as your vice presidential running mate if you're not serious about solving the problem. >> you got to get in and solve the problem. people worry about elderly people and florida now, you know they're going to demagogue and say they're going to lose your medicare and grandma getting pushed off a cliff. we had trump saying paul ryan should not have presented that budget until after the election because you can't tell people the truth because you won't get elected. >> they was going to use mediscare against republicans no matter who it was. from my standpoint that selection confirmed what i already knew about governor romney, he was serious about making this election about big issues and then getting -- he's not running for president through the title. he's running for president so he can fix the fiscal situation of

this country and that's certainly what paul ryan brings to the table. it's a perfect complimentary pick. you have governor romney's background in the private sector in free market capitalism, he understands it, he respects it. you marry that with paul ryan's detailed knowledge of the budget, his relationships in congress, not only can paul help craft the legislation, he can help get it passed. that's the bottom line you have to pass legislation which this president has failed to do. he doesn't come to congress. he certainly doesn't talk to republicans, i'm not sure he even talks to members of his own party. we need leadership. that's the missing ingredient. we've got trillions of dollars sitting on the side lines. there's such a lack of confidence, such a high level of uncertainty, we need to return certainty to this economy and we do that with new leadership. >> senator johnson, it seems so far mitt romney has been defined more by barack obama and the democratic party than by mitt romney and the republican party. this is his week. >> yes. >> how will he define himself so we can see he's a leader and can

get these things done? >> certainly what i've come to know if terms of governor romney from a personal situation he puts faith and family first. from the governing standpoint he'll put america first, not worried about re-election. he has a great opportunity now and i'm sure he'll seize it. i've seen him give speeches in person and that doesn't get always covered so you have that filter through the media but this is the moment when you stand up on that stage and you can describe to the american people about why you want to do this, and again, you know, he certainly convinced me he's doing this because he loves his country, he's highly concerned about it. he wants to save the nation and that's what he'll convey on thursday night, i'm positive. >> do you get tickets to the debates, senator? are they offered to you? >> joe, i'm new here. i'm taking this one step at a time. this is my first convention. i hope i get some tickets. >> what do you think the ticket to the vice presidential debate

is going to go for? do you think i'll be able to scalp any, biden versus ryan, can you buy tickets to that? will that be on stubhub or something? >> depends on which jurisdiction whether scalping is legal or not, joe. >> but you can't get me any tickets to that at this point, right? >> i'll try working on it. >> senator, we appreciate it. >> you'll be the first one. thanks for having me on. >> maybe it will be televised, right? >> yes, it will. >> i just got to see that. with the handlers, i wonder what they're thinking, do you think the handlers are nervous? anyway -- >> i'll take it from here. when we come back the city of tampa playing it safe from tropical storm isaac. we'll hear from the man in charge, tampa mayor bob buckhorn will join us right after this. tomorrow on "squawk box,"

investors closely watching the republican convention for the message from the gop presidential ticket. we'll talk to senators orrinne hatch a orinhatch and susan collins and donald trump's presentation tonight is sure to be a topic around the water cooler tomorrow. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. so, what's the problem? these are hot. we're shipping 'em everywhere. but we can't predict our shipping costs.

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welcome back to "squawk box" everyone. tropical storm isaac forcing emergency preparations in tampa and postponing some of the early events at the republican national convention. joining us is tampa mayor bob buckhorn and mr. mayor, thank you for joining us this morning. >> it's good to be here, thanks. >> can you tell us a little bit about how tampa has been preparing for isaac, what it's meant and what kind of changes are there as a result? >> the good thing is we prepared for an isaac storm every day, all year round, part of our dna as floridians. we train for t we have contingen contingencies. hosting the second most viewed television event in the entire world while juggling a hurricane is a little challenging but that's what mayors do. the rnc made the right decision

to cancel today's proceedings. tomorrow will be a fun filled day. we don't anticipate any tidal surge. there will be wind and rain today but i think it will be heading out to the gulf of mexico and i am thinking of my fellow mayors on the gulf coast. >> we're doing the same thing here. mayor buckhorn, you are a democrat hosting the republican national convention. does it put you in an awkward position to do this? this is a big deal for tampa to have the rnc here. >> it is a huge deal. for me i've beening agnostic through this entire process. this is an economic developmentment for my city. we are so proud to host this event, the biggest thing we've done, we are rolling out the red carpet for the national republican convention. it has a huge economic impact for us. partisan politics can wait. for me and my city this is about what's good for tampa and show casing tampa to the world. >> what kind of economic impact, can you quantify it?

>> $100 million to $200 million, cash infused into the local economy but more importantly than that is the long-term residual impacts. even with the storm the number of mentions of tampa, florida, will go into the tens of millions. we couldn't buy that. remember, we've hosted four super bowls, the magnitude of this event by comparison is significantly larger in every aspect. it's a great opportunity for to us tell tampa's story, celebrate the democratic process, allow the republican party to deliver a nominee and it's going to be a good three days. >> how is the economy going in tampa and the surrounding area? how have you seen things over the last six months or so? >> last six months have been good. we've seen a resurgence in commercial construction, permit activity is up. we were kicked in the teeth in the recession. we were an economy that was largely driven by real estate, which we understand is not sustainable so coming out of this recession i'm trying to change tampa's economic dna and

start to move us in a drimiffer direction. i think tampa will lead florida out of the recession. the signs are there. it's an opportunity for us as we come out of this. >> how is rick scott doing? >> economic development efforts he's focused, he's my partner. i couldn't ask for a governor that's more helpful. obviously i disagree with him on other things but when it comes to a focus of jobs and streamlining of bureaucracy and creating a state that has a lower tax rate i think he's been fine. >> you've got no income tax, and you like rick scott, there's nothing preventing you from being a republican, is there? >> well, you know, if i -- >> what do you disagree with rick scott on? >> there are other issues he and i would probably part ways on. >> you're hosting the republican -- you're so happy, you're in the hall, bubbling with enthusiasm. don't be afraid. step in. the water's fine, bob. >> that's because i haven't slept in about a week. >> you don't have -- did you try to raise taxes -- you think high

taxes, you got no income tax in florida. does that help with the job creation down there? >> it does, it creates an environment down here friendly for corporate relocation, for corporate expansion, here at the local level i've stripped down the regulatory process, streamlined the permitting process. >> oh, man. you don't sound anything like -- i think you got to come out, man. you're in the closet. >> if mayors ran the world, it would be a whole lot better. z>> you have to live within you means and govern which is unlike those guys in washington. >> i do. >> and governors are the same way, it's harder to tell the party divisions with governor. >> i had to balance a $27 million deficit and we did it without raising taxes and without laying anybody off. mayors have to deliver on what they promised. . the further you get removed from the people that elect you the more confused you get. as a mayor we're practical, pragmatic, less partisan. we build things, we fix things,

with he grow things and candidly i don't care whether it's a democratic or republican way to do it. if it works for my city i'll get done. >> mayor buckhorn we appreciate your time and best of luck to you this week. we'll be watching. >> thank you. up next the tea party's making their difference their presence felt in tampa, the head of freedomworks shares the 12 items on the group's political agenda for the convention. and republican senator bob corker will talk about the economy, banks, and what investors can expect under a mitt romney presidency. "squawk" willi be backing in tw minutes.

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tea party members will be making their voices heard this week at the gop convention presenting their 12 for 12 freedom platform. matt kibbe is author of "hostile takeover." he joins us now, good to see you. you guys got a big write-up in the "wall street journal" that this ais the alliance, all the hatchets have been buried, the selection of paul ryan makes everybody happy, the tea party, everybody's in sync. i got that syncing feeling. was ryan the thing that really brought everybody on board with romney? >> it was definitely an indication that republicans were willing to be a party of ideas again and we saw that in the

development of the platform, we're seeing it in a number of battleground senate races and now every republican, state, federal candidates, they all have to be comfortable defending the ideas we have to balance the budget, we have to do something about entitlements that we can't just repeal obama care, we have to replace it with something that puts patients first. >> the thing and i guess this is the question a lot of people have, we've been through sharron angle. harry reid is still senate majority leader, for all the good that i guess you would say the tea party has done in certain races, it can backfire, can't it? if it backfires and the national election, was it worth it? >> there's nothing perfect about bottom-up politics but if you look at the net in 2010 we picked up if you include scott brown a net of seven seats. the tea party had a lot to do with that. the republican establishment was saying that maybe, just maybe they could pick up one seat.

so you got to look at everything but the evolution of the tea party allows us to get in early, recruit candidates that have both the ability to run a decent political campaign and the philosophical belief that unites them with conservatism. >> you have the independents in the middle and some say the tea party might hurt the chances of those -- i've had people that sit here on this set saying they're not sure who the real romney is, is he the romney that governed a northeastern state in a moderate way or the extremist that president obama is calling him now. which is he? if there is a perception is he an extremist, can he win? >> we don't count on any politician to do what they say they're going to do unless grassroots activists are there to support them when they get it right and to tell them when they get it wrong. this idea that somehow the tea

party agenda, the idea we should balance our budget, the idea we should stop spending money we don't have, the idea the federal reserve has gone crazy expanding the money and credit supply, this is where the very center of american politics is today. >> is the tea party keeping aiken in? you can't take over the senate, the tea party is all he has left. everybody else is saying he's got to leave but he has the far right with him. >> all of the tea party activists i know national and in the state were behind one of the two other candidates, and they have been the first to ask aken to get out of the race. you're responsible for your own actions, you're damaging not only our ability to pick up the seat in missouri but nationally. they've been vocal in denouncing aken and asking him to be responsible for his own behavior. >> jeb bush yesterday said we need a broader republican party, if we're going to win and win

consistently. how do do you that, and still promote these ideas so you don't alienate enough people in the independent ranks that the republicans desperately need to win? >> i really think that the idea that government is one of the road blocks to economic recovery, i think every american understands that. certainly independents do. they don't trust washington, d.c., they don't particularly trust either party and if you look at the ranks of these activists, they had been sitting on the sidelines before, because they didn't see a difference in either party. i don't see a fundamental difference between mobilizing activists on the ideas of fiscal responsibility and engaging those swing voters in the battleground states. i think it's very much the same project. >> matt, quickly, what is the most important plank in the tea party's platform that you want to make sure the republicans pick up? >> i really think it's balancing the budget, and meaning it when you say you're going to do that. that's why we're so excited

about paul ryan. his budget wasn't perfect but at least he put ideas on the table, something democrats weren't willing to do. >> matt thank you for your time, we appreciate it. >> thank you. when we come back, an update on isaac, plus emergency preparations from the gop convention in tampa. also senator bob corker will be joining us at the top of the hour. "squawk" will be right back. at optionsxpress we're all about options trading.

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welcome back to "squawk box" here on cnbc, first in business worldwi worldwide. i'm joe kernen along with becky quick. andrew is off this week. our guest host bob doll, senior adviser to blackrock. checking u.s. equity futures, i did a calculation, we were up like 12% from december 31st, and then in june we went back to basically unchanged. now we're -- >> up again. >> -- we're up, but we're up 12% so my 30% forecast, i need a lot of good things to happen. >> you were right, it just came in two different, if you add them together. >> or back to the lows pre-2012.

i want a calendar 30% and you are no help. >> i'm sorry. muddle through, grind higher. >> oh, we got 12%, this is, after ten years we're almost even. this is great, get out. >> no, no, not get out. >> find a few stocks but it's already up so much that we don't deserve any better than this? >> buy them last october and buy them in june, when that's all you can get out of the economy. >> that's all we can get. >> that's all you can get. you give me a better economy and cleaned up europe and i'll do you 30. >> the s&p was like eight years ago? >> quite some time, back to -- >> this is what we get in this great country and you don't want any more? >> oh i want a whole bunch more. we got to solve a few problems first. >> there's no hope for that. >> we have an election coming, don't with he? >> yeah, we'll see. isaac is now a tropical storm on a west-northwestward,

probably that would be -- >> northwest would be in between west and north. >> very good. >> you got it. >> we actually need a degree. >> 60-degree? >> now you're messing me up. i say it's a complete turnaround, 360 degrees, i messed that up, 180. northwestward march into the gulf of mexico. hurricane warnings issued for portions of the northern gulf coast. isaac is threatening to disrupt u.s. offshore oil and gas supplies, platforms evacuated and production split. eric fisher from the weather channel joins us live from ft. myers beach, florida. i probably should have gone this way, too, for the viewing audience. >> we're doing our north-northwest. >> eric, there were some swells all weekend long down in the south, huge swells. i see some behind you, too.

>> we've seen the waves come up yesterday, we had the offshore wind all day long, flat gulf of mexico but certainly not the case this morning. florida dodging the worst case scenario. squally weather through the day, chance for isolated tornadoes, gusting winds over 50 miles an hour and tens of thousands of people without power this morning so certainly not unscathed but not taking an eastern gulf of mexico track so the worst off toward the east and we'll be tracking that toward new orleans, gulfport, mississippi, into biloxi and of course as you get more toward the louisiana/mississippi coastline that's where more of the oil platforms are, you talk about more disruption for them compared to three or four days ago with a more eastern gulf track. we'll be watching the storm slowly moving up toward the north today. florida heavier weather through the day and likely into the day tomorrow. not widespread damage just disruptive weather we'll be talking about and looking at the storm working toward the north

central gulf where flood something a big concern, not just the surge because we have a sprawling storm but the rainfall, latest estimates up to 20 inches of rain for southern alabama, mississippi, maybe even the florida panhandle if the track changes a little bit and heavy rain in new orleans, you know the story there, they can only pump out so much water at a time so when it's coming down heavily they have issues in the city and they will take this very seriously in light of what happened seven years ago and this landfall could be almost exactly to the day seven years later so a lot of folks with scars still from katrina, we'll be think being this storm. we want to get across this storm is not forecast to be like katrina. big impact but not the huge humanitarian crisis we had to deal with seven years ago. joe, back to you. >> great, eric. that's the bright spot anyway hopefully. thanks, eric. we'll see you. >> reporter: hopefully. >> the worst weather from tropical storm isaac is expected to miss the republican convention in tampa but the

schedule is being adjusted. reince priebus will be calling the convention to order but shortly after that gaveling the convention into recess. john harwood joins from us tampa with the latest. john there is still a lot of activity that's expected. >> sure there's a lot of activity and before i go further, i want to say with those hand movements that joe was making if the tv thing doesn't work out, he could get one of the airport tarmac jobs guiding the planes into the gates. >> those guys, any kind of decent work i'm behind, john, i have no problem with that. or a weather guy. you see those guys they blow like that and the wind goes across. >> you couldn't handle that, your hair would go crazy. >> and also doing everything backwards. also you're doing something with the screen that's blank. >> it's blank behind you. >> which is hard. >> all right, on to the story at hand. it is one thing for mitt romney and paul ryan to go out on the

stump and campaign and get local coverage and little blipz on the nightly news as paul ryan and mitt romney did in ohio over the weekend but quite the other thing to have the undecided attention for a few minutes of millions of people who haven't gotten the opportunity to see mitt romney up close and paul ryan. paul ryan gets his shot wednesday night to speak before this convention. mitt romney will accept the nomination and speak thursday night, by far the most important event at the convention and if you look at the numbers nationally, the average of real clear politics, barack obama's ahead by one point, 46-45 and the race is concentrated on a handful of battleground states. look at the polls in florida, dead heat, 46-46, so romney clearly has an opportunity. he's going to try to repair some of the image problems he's accumulated from president obama

and the democrats laid upon him from taxes and bain capital. he tried to rebut the charge we accounts in cayman islands and swiss bank accounts to reduce his tax burden. >> there was not one dollar in reduction of taxes by virtue of having an account in switzerland or a cayman islands investment. the dollars of taxes remained exactly the same. there was no tax savings at all. >> of course that's not going to stop president obama and democrats for demanding more years of tax returns than the two mitt romney is going to release. once we get to the heart of the convention and mitt romney speaks to the american people about his plans for laying out the economy, for fixing the american economy that's going to be the dominant story coming out of here until democrats convene in charlotte, not likely these conventio conventions, either one will have a huge, lasting bump in this race but they could have a small impact and other than the debates which will occur in october there weren't many

things that will shake this race. it's trench warfare until the end. >> john, abc/"washington post" romney up one and the rcp average you're right, one, that's slim, 1.1%. >> it's been coming down. >> and the right track wrong track is hideous, 31.4 wrong strak leadi track leading over -- you're right, and neither side has any idea what the outcome will be at this point. it will be exciting. >> it will be close but you know who might know what the outcome is going to be, bob corker, senator from tennessee. >> funny you should mention it. >> he's exceptionally forward-looking and analytical. >> we'regoing to have to see how things work out. >> that is a good corker. >> well, you know i've been here that long. we've got a little bit of a ross perot in there, too.

wait a second i hear someone in the background. senator corker? are you here, senator corker? >> oh, my god. >> thank you so much, i feel a little made fun of but i'm glad to be here. >> i'm embarrassed. senator, you know how much i love you. you're one of the most reasonable plain spoken people down there and don't say that that southern accent the way that you do it, that part of it, that part of the whole charm, and i try and use that. >> builds a lot of trust. >> right and deflects -- makes you a lot more, both sides are able to listen to those dulcet tones more than some of the other. you got to let's hear him and you'll see what i mean. >> senator, you are there at the gop convention and i wonder from your perspective what's most important from the perspective of what should be happening at this convention? should you be trying to make sure you bring out the tea party people who maybe were a little reluctant beforehand to support mitt romney or is this more about appealing to the

independent voters who are out there watching trying to decide who they're voting for? >> i think the convention will be a good opportunity for people to know mitt romney and i think that while they trust him as it relates to economic issues they haven't had an opportunity to get to know him like i have and many of you have. i was with him out in park city not long ago at some events and truly between he and his wife, ann, you almost feel like when you walk away you're a lesser human being. this is aboutstanding family done a lot in their lifetime and the kind of folks people will admire in that office. the second thing, look, usually when you come to a convention like this, john's been to many, you know, the team wants their person to win because that's what they do. republicans want a republican president, democrats want a democratic president. in this case i think what you're

feeling are people are very concerned about the country so it's a little different than the norm. this is probably, this has to be the most important race since 1980 and i think people sense that. so it's more than just wanting their home team to win. it's about tremendous concern for the direction of the country, which i share, by the way. i'm very concerned about where we are. i do believe that mitt romney and paul ryan absolutely are most able to take us where we need to go and so i'm very excited about this team and as i've mentioned to you before, i think the pick of ryan cements the fact that governor romney is going to take on the tough issues that this nation needs to deal with, and that ought to give americans a lot of confidence that this is going to be a truly remarkable presidency, if they're elected. >> senator, where do you think we stand, you look at the history of the country, and you think of, you no he, some of the things that we used to think about, the turn of the century,

8% government spending as a percent of gdp at the turn of the, you know, 1901, whenever it was, and we're at 25 now and headed to 40, if we don't change, but where are we as a country? you think you still have the majority of people in this country voting for individualism and self-sufficiency and not a collectivist viewpoint? i'm wondering whether we have passed the point where you can get a majority of people to sort of vote against a bigger public safety net, and that's what the other side is appealing to that, you know, and it may be counterproductive a lot of these things and we see what's playing out in europe. it doesn't help, if public safety nets run out of money, it doesn't help anyone but we are in this period now the income disparity, this is the grand question that we have right now. i don't know what you feel the american people are going to do at this point.

>> that's a discussion that we have in the hallways of congress all the time, and have we moved beyond that point and that's why i think it's very important in this week and the next several weeks for mitt romney to let people know who he is so the likability factor changes and we have a real discussion about whether we'll move back down to where we've been, since for the last 40 years we spent about 26% of our economy on the federal government. as you have mentioned, we're moving in a very different and dangerous direction, and what the president has been doing is creating sort of this make believe that we can continue down this path forever and there really aren't tough choices to make. what romney and ryan have to appeal to is the generations of americans who know that this country is great, because people have had to make tough choices for those coming behind them. that's what they have to appeal to. i still believe that's the

america that we have, and i think people understand, you cannot continue down this make believe path, where everybody or more than 50% of the people in this country are benefiting from transfer checks from those who are productive, so that's really the choice in this race, in my opinion, and i think again, the biggest race we've had since 1980. >> senator, can i tell you about some breaking news? hudson city bancorp is being acquired, calling this a merger but looks like hudson city bancorp is being required by m&t bank corporation. they can receive 0.084 in m&t shares or receive the equivalent in cash, they're expecting 3.7 billion when all it done. senator you're on the banking committee and this raises questions about some of the smaller banks that's been said in a lot of circles that small banks can't continue to exist

because of regulation. i know some investors who have been betting that banks that are the billion-dollar variety when it comes to that market cap are no longer going to exist. what do you think about this sort of consolidation? >> i don't think there's any question that after the dodd-frank legislation passed, everyone, i think on both sides of the aisle had predicted there's going to be tremendous consolidation. in tennessee we have community banks that in many cases have more compliance officers and lenders, so when you move to this type of regulation that we have, the big just get bigger, the smaller disappear, and i think you're seeing recentlial banks trying to understand how they're going to fit into the mix going into the future, but this is exactly what i think all of us have expected to happen, if this legislation stays as it is, and hopefully after this election we'll be able to make some changes so that we're not stifling these community banks, which let's face it, in a small city, a small town, those are

the folks that are members of the rotary club, the civic leaders, the chamber, those are the folks that chair about their communities, but they certainly are under tremendous threat, and certainly it's not the same when some major conglomerate comes in and takes over those positions in a community so hopefully we'll be able to peel back much of what is driving what i think will be a tremendous amount of consolidation of our country if we don't. >> fair to say you are concerned about this trend? >> i'm definitely concerned about it. i think again i think most people in your viewing audience know the difference, they live in communities where the community bankers involved there, and knows the people, and wants to see the community do well so yes, i think it's going to affect the smaller communities around our country disproportionately, and i think that's bad for our country. >> john, sorry, i cut you off before. >> i was going to ask joe, why would you think we've passed the point as a country where we celebrate individualism versus

collect i haveism? we've got a balance but you look at the last eight presidential elections, republicans won five of them, they controlled the house, they controlled both chambers of congress for much of the last decade. we've got an evenly balanced country and they're going to fight it out to the end. >> because if they go from where we are today in terms of who pays part of the, we're at 49%, i know you're going to say 49% pays payroll taxes but you know the fear, if we get above 50%, and you're able to have 50 or 51% on the receiving end of government largesse, how do you know that's not when we never elect someone from a different party from there on out? someone would be voting against their own self-interest at that point. >> self-interest defineded that way is only one of many things that determine how people vote. i don't think we're headed toward a one-party country any time soon.

speculation when rogue was advising bush, republicans are going to take over. democrats aren't going to take over any more than republicans will. >> who would you stick it to, to get elected year after year, 1% or 99%? >> how come obama doesn't have 99% of the vote? >> it doesn't work that way. >> why doesn't he have 92% of the vote? >> anyway we'll be right back.

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welcome back. breaking news, m&t is buying hudson city bancorp. kayla tausche has more on the story. kayla? >> reporter: well, becky, it's interesting to see a deal of this size, and what appears to be the biggest transaction of this kind in at least the last two years, since dodd-frank was introduced to the current financial lexicon. if you look at where hudson city was performing, its cost of funding itself was higher than its own return on equity. this will be an important point for bank consolidation going forward and hudson city just found itself at a point where it

said we need to lower operating costs and figure out how to make this more streamlined and more efficient in the current regulatory environment. of course we saw that this is a cash and stock deal by m&t and if you see m&t shares go up, this could be an important sign for the industry because that will bring the overall transaction value for this transaction specifically up but it will also mean that the industry recognizes that this is a good deal ultimately for the sector and there will be more consolidation. i will note the only sticking point that really appears to be there is perhaps from a regulatory standpoint. we haven't seen any bank consolidation go through the current regulatory landscape in the way that it's drafted right now, and currently hudson city is under a memo of memorandum of understanding rather with the fed, and pertaining to its risk management if the fed feels like hudson city isn't at a point where it should be marching with another bank that could be a

sticking point. we saw regulators get involved with the ing deal. over the weekend it gathered steam, the deal talks gathered steam because of optimism over the current regulatory landscape. we'll have more throughout the day. that's my latest first glance this morning. >> kayla, thank you very much. when we return on "squawk" we'll be talking to a man who runs a hedge fund seeded with $50 million from clairial capital. grandmaster capital's patrick wolff will talk about equities and the bubble in china. plus an update of the republican national convention. s the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country

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welcome back to "squawk box." let's look at some of the stocks on the move this morning. aol is high after declaring a special dividend of $5.15 a share, look where the stock is at this point. $5.15 a share, saying it would repurchase $600 million in shares under an accelerated buyback program and the company is returning $1.1 billion to shareholders, the same amount it got from microsoft in an april

patent sale. hertz is buying dollar thifty for $2.3 billion in cash. tiffany shares are higher despite the earnings release, luxury goods earnings fell short of estimates, it's cutting its outlook for the year, but it is indicated higher. gulf coast residents are preparing for tropical storm isaac. cnbc's scott cohn joins us now. wow, scott, yeah, rough down there for you. get some cover there, buddy. looks tough. >> reporter: yeah, right. well, look, i mean the storm is still about 400 miles away from here. they do say that they could start feeling some effects here on the gulf coast by the end of today. the extreme outer bands of isaac, which is still a tropical

storm with 65-mile-per-hour maximum sustained winds. the longer is stays just a tropical storm the better off for everybody. so we'll see how that goes. they say within the next day or so according to the national hurricane center we could be looking at a hurricane in the gulf of mexico, but again the longer that it takes to become a hurricane, the less of a threat it is to here on the northern gulf coast where hurricane warnings are in effect. the read from florida, where there was a potential for a landfall in the florida keys is that it could have been worse. lot of heavy rains, a lot of wind, quite a bit of power outages, about 20,000 people without power but again, not what a lot of folks feared as this storm was making its way to the straits of florida, going into the weekend, so that is a good thing. nonetheless, mandatory evacuations are getting under way from alabama all the way toward louisiana, to the new orleans area which is in the path of this storm potentially,

as people get ready for it, and i can tell you that here in southeast alabama, we have seen activity, a lot of people in stores, stocking up on things, but no mass exodus just yet, so that is a good thing, hopefully the storm stays under control. but it is having an impact and potentially a considerable impact on energy production, take a look at the statistics from the bureau of safety and environmental enforcement which now looks at gulf oil production, 24% of oil production shut in as of yesterday in the gulf of mexico, 8% of natural gas production shut in and we're looking at refining capacity, the refineries are further to the west, farther to the west this storm tracks the more of an issue that potentially could be but again the hope is that it comes ashore as a category 1, which is something that we could potentially absorb, but supplies are tight with the explosion in venezuela last week, the refinery fire in california as

well. there's not a lot of room for error, so the hope is that this comes and goes quickly. guys? >> all right, scott cohn, thank you. you'll be reporting down there all day and we'll see what happens, 400 miles wide. see you later, scott. the markets as you know they have had a nice run lately. will the rally continue? patrick wolff started grandmaster capital back in 2011, packed by peter thiel, the fund is up 18% year-to-date, and sir, thank you for joining us today. >> thanks for having me. >> we know peter thiel gave you seed money. you're the only hedge fund he's ever seeded. how did you run into him? >> i met peter actually almost a dozen years ago when we were both working in silicon valley. unfortunately i was not working at paypal so the dot-comi was working at didn't have the same happy ending. we became friends, go the to know each other and in 2005 came out to join clarion and worked with him there for five and a

half years. >> you have a long short strategy for this fund. >> yes. >> you think stocks are the place to be right now? >> well, yeah, i think if you look at asset classes, equities look a lot better than most other asset classes in terms of yield, and frankly, i think in terms of prospects, so long as you avoid some of the macro head winds in the world and basically my view would be pretty simply expressed as a fortress america view. the fundamentals in the u.s. are good enough where you can focus on finding good companies. europe's got all the obvious problems that we talked about endlessly and china we're very, the hold merging complex in our view is a dangerous place to be exposed to. >> you said in your notes you think chanos is optimistic when it comes to china.

>> maybe wildly optimistic is strong but the point just being that i do think china's economy is in very big trouble and it's a dangerous place to be exposed to. >> if you play this fortress america what do you do with companies who have exposure to china, they have exposure to europe. do you think they are able to navigate the storm? >> look in the end, it's a company by company analysis, and really our view is just that the best place to look for great ideas for the most part are companies that are largely exposed to the u.s. economy, just because that's where really they'll be able to control their own destiny much more. >> patrick, i agree with you, exposure to the u.s. economy relative to many other places at least here and now is a good way to go. that brings you down in capitalization as you try to avoid the multinationals and yet bigger companies have been outperforming smaller ones. how do you square that, sir? >> i think a lot of actually the

u.s. has a lot of very large companies that are largely exposed to the u.s. i don't think you have to fanatically avoid the rest of the world. i think mainly what you want to do is look for companies that can control their own destiny and insofar as they are exposed to economic sort of volatility, and you probably want more of that volatility in the u.s. as opposed to other economies and if you look at where earnings have really been more at risk, i think you'll find that in europe and in asia, there's been much more troubling news and troubling guidance, vis-a-vis earnings. >> patrick, your fund is up 18% year-to-date. where have you found the most success in which of the theses you're playing out and which industries? >> well, you know, we are very much, we're stock pickers. i sort of jokingly like to refer to my approach as four parts warren buffett and one part

peter thiel and basically the idea is very much value investors, understanding companies, and really looking on a case by case basis, but also with an understanding of the macro and trying to side step the big sort of looming problems out there. >> but what specifically? if it's stock picking, do you have specific stocks or anything that have really been some of your better picks? >> to be honest i want to avoid talking about individual stocks but we've had good success pretty much across the board in terms of the companies that we sort of focused in on and again it's really, you know, first sort of trying to understand the big head winds in the world and we think china is a huge, huge event. literally we think that china could turn out to be a bigger event in many ways than the housing and the finance bubbles in the u.s., and so we just sort of try to sidestep that and zero in more on the company by company analysis.

>> patrick, thank you for your time today. >> thank you very much. >> back to guest host bob doll. we've been talking about this bank merger earlier today. what do you think the signals, what do you see when you look at some of the smaller financials? >> i'm surprised we haven't seen more of this sort of thing earlier, with the increase in capital requirements, the increase in regulatory costs, it's tougher for a small and medium sized banks to generate returns sufficient to continue their operations, with banking overall being more questionable business. in my view, we had too many banks before the events of the last few years and you layer this on top of it. i think we will see a lot more of the kind of thing we're seeing this morning. >> for those just tuning in, we've been talking about the merger announced this hour. hudson city bancorp is being bought by m&t bank. we have seen again some of these smaller banks that have come under pressure because of what's been happening with regulations. bob spoke with senator corker earlier today who is on the

banking committee who said that he is concerned about how these things are heading. as an investor you look around, does that make you look at some of the smaller financials and think maybe it's time to buy if you expect more of these deals? >> i think that's probably right, if you're a smaller cap investor and you can take a package approach to these sorts of things. that's probably not a bad strategy, assuming the regulation continues to go through, you know, do the republicans try to dismantle parts of dodd-frank, what about the volcker rule, there are so many uncertainties, causing the banks to sit on their hands waiting for clarifications. >> given stocks muddled through things and continue to do so, we've seen big gains but what are the sectors you really like? >> i'm still in the health care sector. health care has gone from 5% to 10% of global gdp in the last three decades. assuming the world continues to grow even at the small pace we're guessing it will, and that

people age, which is certainly the case especially in the developed world, the demand for health care, the ability of these companies to create break-through technologies, either in pharmaceutical or medical equipment or those sorts of things, i think we'll make health care an interesting place to be and over the decades it's been one of the best sectors. >> bob is our guest host. we'll have more from him throughout the rest of the program. >> can you get in trouble for retweeting people? >> i don't think so, unless you tweet something really awful. what is it? >> this guy joe kernen's hair is funny. he says, "when the cameras turn off, scott and the crew drink beer and throw the football around the beach." couldn't you see cohn down there the minute we get done. he says things that i would like to say i'm afraid to say. >> that's why it's someone who knows you or watches the show religiously. >> i'm going to retweet him, joe kernen's hair. he is funny and he says, he's

your baby, you discovered him. >> i was his 13th follower. >> you ran in on the ground floor like a facebook person. >> i'm an investor. coming up tropical storm isaac threatening the gulf coast. how the oil industry could be affected. plus how further fed action could impact commodities and natural resources and talk to rick ruehl, chairman of sprott u.s. holdings, in two minutes. [ male announcer ] while many automakers are just beginning

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♪ "hard to love" song. >> i like it. >> you like this song? >> only from what they've been playing today. >> i'm hard to love. >> no you're not. >> from liberals. >> the man i see coming in here? >> i love you. >> but the liberals are, wow? what do i do? all right. hard to love. how will this year's hurricane season affect u.s. oil and natural gas supplies? joining us now from vancouver is rick rule, chairman of natural resource investment specialist, sprott u.s. holdings, rick, it's good to see you, and i love

vancouver. i'm not saying i wish i was there but sounds like a good place to be from today. first of all, how much higher do we go in crude and why are we here in the first place? was it qe3 or what? >> i think it partly is qe3, partly it's a function of continued tensions in the middle east which haven't disrupted supplies, but have caused people to be afraid that supplies would be disrupted but probably more importantly the fact that more and more crude oil production on a global basis is controlled by national oil companies and the national oil companies have been diverting a lot of their free cash flow away from sustaining capital investments to politically expedient domestic spending problems so countries like mexico, venezuela, iran, have been diverting more and more sustaining capital from production to domestic spending programs, and we've had a bit of a supply constraint. in the united states in contrast with the new technologies that we've had, we have a bit of a supply boom, an energy supply boom in the united states, and

going back to your original question, the impact of the potential gulf coast hurricane on energy prices, i think the price response will be muted this time as a consequence of shale oil and shale gas production in various regions of the united states, outside of the traditional producing zones in the gulf. so i think any price impact of the gulf on near term energy prices in the united states will be much more muted. >> but the same factors that you just talked about haven't muted the overall move higher globally because of what you're seeing in other countries. so it won't apply here but it hasn't helped in the other situation. >> that's correct. if you look on a global basis, the benchmarks for global crude oil prices brent are much higher than u.s. domestic prices reflecting a tightness in oil markets overall. that's as i say partly a function of constrained supply from national oil company under

investment and partly a consequence of pretty strong growth in prior years at least out of emerging and frontier markets. >> not really globally. with what we talk about with china and europe and everything else it's weird to see $97 with what you would have thought it would reflect, more of sort of a global soft spot in demand. what do you mean by, what are they spending it on in mexico if it's not exploration or in iran, domestic spending, what do you mean? what do they spend it on? >> ironically in both countries they subsidize gasoline and heating oil consumption so they stimulate internal demand while they constrain internal supply. i don't think it can last. i think the level of production that, the production declines that you're seeing in countries that have national oil companies like mexico and wevenezuela are dangerous. the point is you can't turn around and begin to spend next year, when you have

underinvested for ten years in the industry. it takes a long time to turn around those production declines so i think there will be a problem three or four or five years out, a real supply problem on a global basis. >> and rick, not to get political but we do have an election coming up. we've had a boom in this country, but you probably wouldn't say that it was because of the current administration, would you? have they looked just sort of looked the other way or have they actually, you know what i'm saying. you wouldn't think this would be the time to be booming, would you? >> i'll save the political comment. i suspect that what you've seen is temporary. i suspect you see an administration, a political establishment that's trying to solve a solvency issue with liquidity. there's been no shortage of cash in the system but one wonders if this economy is based on liquidity, whether building an

economy on what is in fact counterfitting, is very good for the economy in the long-term. i'm a believer in markets, and i believe that the 2008 events were a reflection of longstanding systemic problems in the economy, and i think that we should have allowed the economy to correct further. having said that, as you say, they're putting at least $1 trillion, perhaps $1.5 trillion a year in artificial liquidity into the economy so there's no doubt that there is a bit of strength in the economy that we wouldn't otherwise see. >> you're not canadian. you live up there, just visiting or what? >> i work in the natural resource business worldwide and canada is a very, very, very important country. >> are they mad at us, do you know? >> no, no, no. >> not from keystone? they went west, young man. they don't care about us. >> the canadians like us a lot.

>> we're doing all we can to end that. >> the canadians respond to american suggestions that the oil sands are an american an am resource with some hostility. which shouldn't be a surprise. >> rick, you're not hard to love. thank you, appreciate it. >> thank you. coming up, stocks on -- >> your read. >> stocks on the move ahead of the trading day. we'll head down to the new york stock exchange and get the latest buzz from wall street. shipping 'em everywhere. but we can't predict our shipping costs. dallas. detroit. different rates. well with us, it's the same flat rate. same flat rate. boston. boise? same flat rate. alabama. alaska? with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate. dude's good. dude's real good. dudes. priority mail flat rate boxes. starting at just $5.15.

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welcome back. making headlines now, dan ustan is retiring and lewis campbell is going to take over. he's the former chairman and ceo of textron. carl joins us now. are you following me on twitter? >> i think he was the 14th follower. >> yeah, i was an early adopter. i would argue the entertainment

factor of "squawk" has gone up fivefold since that following began. >> i'm afraid to tweet. but i was asking that question, can i get in trouble for -- what this if guy were to tweet his wiener and then i retweeted -- then i -- could i blame it on him? >> can we talk stocks instead? >> yeah, go ahead. >> busy day. busy week, joe, even though it's going to be light volume as we wait for bernanke on friday. apple's a good one. we'll talk about the impact on samsung and google. tiffany raising concerns about china. and we got some m&a between hertz and dollar thrifty and the hudson city news. by the way, kelly evans is here all week on set filling in for melissa lee. >> so she's not off -- >> no. the u.s. open begins and she magically appears in new york

city. >> how did andy murray beat federer? who's best now? >> i don't know. it's a good question. >> who's going to win the u.s. open? >> my money's on djokovic. >> joe's back on his country kick. >> i love it when you come back. you're so rested and relaxed. >> and you know how long it lasts. tomorrow i'm going to be -- >> wait a second. this has lasted the whole show. >> it has. it's a miracle. anyway, thanks, carl. see you in just a few minutes. coming up, parting shots from bob dahl, stick around. ♪

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let's get final thoughts from our guest host today, bob doll. you've been talking about how you think we're in this environment where we just kind of muddle along. we still have big problems. what does it take to break that logjam? >> we have to understand how we got into this. we had a busting credit, as we all know, '08-'09, that we have not seen in a couple of generations. the aftermath of that is a multi-year period of de-lever e de-leveragi de-leveraging. and we're still in that. that's not going to end tomorrow or the next day. >> or the day after that. if you're seriously talking about de-leveraging and the consumer getting back to a position where we don't have as much credit out there -- >> the corporate sector is a long way through the process. financials have a ways to go. the consumer, we've made good process. the last three years, the de-leveraging has taken place. but the public sector, the government, has a way to go. we need to see our way through that before we can clear our way and see normal growth, whatever that means.